Robinhood Upgrade Signals a Powerful Financial Platform Shift

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•  01 Sep 2026
 

$HOOD Robinhood received an upgrade from Morgan Stanley as growth in prediction markets and expanding financial services reduced its reliance on stock, options, and cryptocurrency trading. The bank raised the stock from Equal Weight to Overweight and increased its price target from $124 to $150. The new target implies approximately 43% upside from the latest closing price.

The upgrade was not driven by a Bitcoin recovery, as Morgan Stanley lowered its forecasts for Robinhood cryptocurrency activity. The bank believes the company can continue growing through additional products offered to more than 28 million customers. Robinhood now provides retirement accounts, credit cards, banking services, investment advice, futures trading, short selling, and prediction markets. As customers keep more money on the platform and use more services, the company can generate higher revenue even when cryptocurrency trading weakens.

Second quarter results demonstrated the shift, with revenue rising 32% to a record $1.31 billion. Earnings per share increased 48% to $0.62, strengthening earnings momentum. Customers held approximately $369 billion in assets on the platform, while quarterly net deposits approached $22 billion. The results showed how far Robinhood has moved away from cryptocurrency dependence.

Prediction markets are now attracting most of the attention. These contracts allow traders to wager on event outcomes, such as the winner of a game or an interest rate decision. Robinhood generated $156 million from this activity in the second quarter, compared with only about $10 million one year earlier. By comparison, equity trading generated $129 million and cryptocurrency trading produced $100 million.

A business Robinhood entered only in recent years already generates more revenue than the equity trading operation on which it built its name. Second quarter event contract volume reached 13.6 billion, more than ten times the level recorded in the comparable period. Another 6.1 billion contracts traded in July alone, twenty times the volume recorded in July 2025. The rapid growth gives prediction markets increasing importance in the companys positioning and potential multiple expansion.

Robinhood previously routed a large share of prediction market transactions through external venues, including Kalshi, and shared the resulting revenue. In June, it also began routing transactions through Rothera, a venue jointly owned with trading firm Susquehanna that holds licenses for trading and transaction clearing. Robinhood had already identified prediction markets last year as an area where it intended to expand more deeply.

Transactions routed through an external venue require Robinhood to transfer part of the revenue to the venue operator. When transactions move through a venue in which Robinhood is a partner, a larger portion of the revenue remains with the company. This structure could allow Robinhood to lower prices for customers while earning more from each transaction. Morgan Stanley believes the market still does not assign sufficient weight to this activity in the share price.

Following improvements in prediction markets and other services, Morgan Stanley raised its Robinhood earnings per share forecast by approximately 12% for the coming year. The bank also increased its forecast by approximately 14% for the following year and about 15% for the third year. These revisions reflect stronger earnings momentum from a broader financial platform rather than dependence on a single trading category.

Cryptocurrency activity continued to decline, with trading volume on the Robinhood application falling 74% year over year in July to $4.3 billion. Including Bitstamp, the exchange acquired by the company, cryptocurrency trading volume reached approximately $11 billion, a decline of 62%. Despite that drop, the number of customers continued to rise, showing that institutional flows and customer growth were not dependent solely on cryptocurrency volumes.

Robinhood had 28.5 million funded accounts in July, an increase of approximately 1.8 million within one year. Platform assets totaled approximately $355 billion, up about 19%, while net deposits over the past 12 months reached approximately $75 billion. The figures indicate that customers continued adding capital even as cryptocurrency activity weakened.

Other services are also expanding, with Robinhood Gold reaching 4.8 million subscribers. The credit card operation achieved an annualized revenue pace of $100 million, supported by more than one million customers and approximately $17 billion in annualized purchases. Customers held approximately $35 billion in retirement accounts, representing annual growth of more than 80%.

Robinhood currently has 13 businesses that each generate an annualized revenue pace exceeding $100 million. Morgan Stanley increasingly views the company as a financial platform that sells multiple services to the same customer rather than simply as a trading application. Prediction markets currently provide the clearest evidence of that transformation. They are also a new field that continues to face regulatory questions and concerns involving the use of inside information and the manipulation of outcomes.

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